Despite the supply chain disruption of recent years and current political and economic uncertainty, the semiconductor sector is doing fairly well overall in 2023.
This is largely due to the ever-growing demand for specialized chips used in emerging technologies such as artificial intelligence (AI), autonomous and electric vehicles, the internet of things and 5G.
But there are questions over the industry’s capacity to meet this demand.
The supply chain crisis highlighted the complexity and vulnerability of the industry’s globalized supply chains, with many potential choke points which can hold up production — and lead to sudden shortages of chips.
In our 2022 Global Semiconductor Survey, supply chain disruption emerged among the greatest risks to business success and biggest obstacles to achieving strategic objectives.
To find out how the industry is navigating this changing landscape, we surveyed 100 risk and supply chain leaders across the sector, including fabs, fabless design and intellectual property (IP), integrated device manufacturers and specialized semiconductor companies serving sectors from automotive to renewable energy.
How do they see the supply chain landscape? How are they building resilience? What are the main challenges and risks they face? And what will the supply chains of the future look like?
Our survey suggests semiconductor businesses are worried about a range of supply chain risks, reflecting the complexity of the production process and concerns about the availability of key components and raw materials.
Wider external factors such as political instability, climate change, cyber risk and economic uncertainty are also top concerns.
61% of businesses said losses related to the supply chain had been higher or much higher than expected over the last two years.
79% said they have made at least some improvements in their approach to supply chain management in response to the pandemic.
81% said a lack of data, knowledge and understanding were among the factors posing the greatest challenge to addressing risks over the next three to five years.
76% agreed or strongly agreed that a lack of alternative suppliers impeded their ability to implement an effective dual or multisource strategy.
It’s been a bumpy time for supply chains over the last few years.
For many semiconductor companies, the supply chain crisis highlighted structural issues that had been building under the radar for many years.
As the industry has grown in size and complexity, it has become dependent on a wider network of suppliers located across the world.
This global trading system, which has worked well for years, is now threatened by national interests in an increasingly difficult geopolitical environment.
Other risks such as shortages of raw materials are also becoming more critical.
“Our survey has shown that businesses are working with their key suppliers to overcome these challenges and considering a wide range of strategies to increase resilience.”
George Haitsch | TMT Industry Leader, North America
Our survey has shown that businesses are working with their key suppliers to overcome these challenges and considering a wide range of strategies to increase resilience.
However, they’re often hampered by an inability to get hold of detailed accurate data or achieve full visibility through the chain.
Firms are also facing increasing external risk factors, from extreme weather to cyber threats, which can threaten production of key components and raw materials.
Working more closely with suppliers as partners can help companies understand their supply chains better and address these risks.
Diagnostic mapping and monitoring tools and analytics can help to visualize, quantify, and assess risks across the chain and in specific locations.
WTW has an experienced team of experts with the tools and competencies to help clients understand their supply chain vulnerabilities and align their production with financial risk.
We can also help you manage and transfer risks for both property-related and pure economic losses, helping you build greater resilience against future shocks.
To learn more, download your free survey report by completing the short form at the top of this page.
1 Centre for Strategic and International Studies Russia's Invasion of Ukraine Impacts Gas Markets Critical to Chip Production
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